* Small-scale LNG demand to reach 75 mln-95 mln T a year by
* LNG used as fuel in ships, trucks to drive most demand
* Southeast Asia a key market for small LNG-to-power
* Industry needs more investments in small-scale
By Mark Tay
CHIBA, Japan, April 5 French utility giant Engie
has tagged small-scale LNG projects as a key growth
area for demand for the superchilled fuel amid a supply surplus
that has pushed Asia's spot LNG prices down 70 percent over the
past three years.
"Small-scale LNG was considered by the group to be an area
where we need to boost the activity," Frederic Deybach, who
works on Engie's small-scale LNG programme, told Reuters on the
sidelines of a gas conference in Japan.
Engie, the world's largest independent power producer, is
aiming to develop small LNG-to-power projects in island chains
as investments slump in mega-power projects and demand stagnates
in mature markets like Japan and South Korea.
Total global demand from small-scale LNG projects is
expected to rise to between 75 million and 95 million tonnes a
year by 2030, Deybach said.
That would rival in volume Japan, the world's largest LNG
importer at 83.3 million tonnes in 2016, according to the
International Gas Union in a report released on Wednesday.
Small-scale demand will come from the adoption of LNG as a
shipping fuel, accounting for 20 million-30 million tonnes a
year, and a switch to LNG-fuelled trucks, contributing 30
million-40 million tonnes a year, with the remainder coming from
island-based LNG-to-power demand, Deybach said.
While LNG-to-power demand from islands is forecast to be the
smallest component of the small-scale market, Deybach says its
potential is underestimated.
"The demand can very well be in the range of millions of
tonnes per annum, but that's not going to be overnight. The
difficulty with small-scale LNG (to power) is that you need to
start small knowing that the market will grow," he said.
In Southeast Asia, the firm is targeting countries such as
Indonesia, Philippines and Myanmar.
"Indonesia (has) a lot of islands and in addition to that
Indonesia is also a natural gas producer so that makes it even
more natural for them to consider LNG for their power supply,"
Engie has already been participating in the different
tenders launched by Indonesia's state utility firm PT Perusahaan
Listrik Negara (PLN).
"In Indonesia, the potential is there. It is going to happen
but we just don't know at what speed," he said.
Another challenge the industry faces is the oversized
floating storage regasification units (FSRU) that are the norm.
FSRUs typically have around 150,000 to 170,000 cubic meters of
cargo capacity, almost 15 times larger than what some of these
"FSRUs can contribute to small scale projects like any other
type of LNG receiving terminal ... but there has to be
investments too, into smaller storages, regasification and
smaller facilities," he said.
(Reporting by Mark Tay; Editing by Tom Hogue)